Developers have defended controversial plans to transform a derelict nurses’ hostel in a conservation area into luxury flats.

Seventeen flats and a huge three-storey underground car park will be built on the site at 29 New End Road. A consultation into the development is currently underway by Camden Council’s planning department.

Hundreds of residents launched a campaign to oppose the plans after developers lodged a revised application with the council earlier this year. The building has been empty since 2005.

But a spokesperson for developer Karawana Ltd said: “This is a much neglected site in need of regeneration. The current building is in a very poor state and detracts from the conservation area.

“Our proposals will create much-needed family homes of the highest quality with a design that is sensitive to the local context and heritage.

“We have listened carefully to residents and Camden Council in coming up with our revised plans.

“The new designs are for a smaller building set further back from New End and Lawn House, with a revised window and terrace design to address concerns about overlooking.”

But the Heath and Hampstead Society is still vigorously opposed to the plans.

Member Gordon Maclean said: “We think it is quite wrong for this site to suddenly be turned into a site for luxury flats when it has always been reserved for public use. The need for public housing is absolutely desperate in Hampstead and we think the council has a responsibility to keep the site for public use.

“We are also very concerned about the huge basement excavation and the effect this will have on the neighbourhood in terms of traffic disturbance.”

Campaigners say more than 2,000 lorries could rumble down the narrow New End Road while the site is excavated.

Fears have also been raised that the development could disrupt a network of underground streams while 18,000 tonnes of soil is excavated for the basement.

The consultation on the development ends on Wednesday (July 11).